Providing elder law and estate planning services to the Walnut Creek, CA area. By elder law attorney, Michael J. Young

If you apply for Medi-Cal, the following list includes items that are generally exempted for qualification.

Your home is exempted if it is your principal residence. When applying for Medi-Cal, you will confirm on the application that you intend to return home after your stay in a skilled nursing facility. Medi-Cal requires a “subjective intent in writing to return home” to establish the home as an exempt asset. We have our clients execute an “intent to return home” form when we prepare their asset protection estate plans.

IRAs, 401k’s and other “qualified accounts” are exempt. The applicant however must be taking RMD’s or some amount of principal and interest on a periodic basis.

Not more than $2,000 in cash in the applicant’s name, which could include savings and checking accounts.

One care is exempt. If a couple owns two cars, we request an exemption for the more expensive car.

Term life insurance is exempt, but whole life insurance cannot have more than $1500 cash value.

Qualified or work related annuities are generally exempt. Other annuities may be exempt according to the Medi-Cal regulations.

Household furnishings are exempt.

This list is not exhaustive, and this information is not to be taken as legal advice. You are encouraged to see your elder law and probate attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, probate avoidance, wills, trusts, powers of attorney and probates. We also help Baby Boomers and families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Have you checked in on your older in-laws and parents lately? The holiday season affords a good opportunity for you to see them and observe how they are doing. Here are a few things you should consider when you see them.

Driving

If your older loved one is still driving, find an excuse to ride with them, and observe their behind the wheel skills. Check to see if there are any obvious dents or dings on their car. Do they miss signs and signals? Do they drive very slowly? Do they get lost easily? A client of mine told me that he recently rode with his 87 year old grandmother. I asked him how the experience was, and he told me that it was not good. My client said that in his opinion, his grandmother only had about 10% of the ability that is required to drive an automobile, and that she definitely should not be driving. He said that his grandmother would signal before changing lanes, but that she had no idea if there was anyone in the adjoining lane, and that she almost caused a crash on their ride. He said that she would not drive on the freeways or at night, which is good. He also said that she would only made right hand turns if at all possible.

These are all signs that it may be time to reduce the need for the older person to drive, if possible. You could suggest to them that in addition to not driving at night, that they should drive only during non-commute hours. You could also look into alternative transportation services for them, such as local buses, taxis and Uber or Lyft. Rossmoor has a bus, and there are dial-a-bus services available. If you have the time, you could offer to take your older loved ones to their errands and appointments.

One red flag that we have seen showing possible elder abuse is exhibited by family members who are overly zealous about preserving the money that is being spent for the older person’s care. We have seen family members who are “caring” for an older person, refuse to spend sufficient funds for the older person’ care. This attitude may actually endanger the older person’s health and welfare. These family members may be more concerned about preserving their possible “inheritance” than they are in caring for the older relative, and they may be guilty of financial elder abuse. These are the same family members who will say that this is the older person’s money, that the older person has earned it over their lifetime, and that the family members don’t really care if they “get” anything. Another red flag for elder abuse that we have seen is the sudden advent of relatives or old friends, who have not been seen for years, who are now expressing great concern and interest in “helping” the older person. Another “red flag” for possible elder financial abuse are caretakers who show an unusual interest in the older person’s finances. In these cases, it may be appropriate for the older person to engage the services of a geriatric care manager or professional fiduciary, who can manage the older person’s finances. The older person’s attorney-in-fact under their financial durable power of attorney may be called upon to engage these services if the older person has lost capacity. An elder law attorney and Medi-Cal attorney can help you with the appropriate language and design in the creation of your financial durable power of attorney and other estate planning documents, which may be needed for your care and for Medi-Cal qualification. As always, you should have your estate planning documents prepared sooner than later, and while you still can.

In California, Probate Code section 10810 statutorily sets the maximum amounts that executors and attorneys may be paid for their fees. The amount of attorney fees and executor fees are ordered by the court at the end of case. If the case is complicated, for instance where litigation is involved, the attorney can request that the court allow additional fees for the attorney’s extraordinary services.

The formula for calculating statutory fees for the attorney and for the executor are as follows: (1) Four percent for the first $100,000 of the estate; (2) Three percent for the next $100,000; (3) Two percent on the next eight hundred thousand dollars; (4) One percent on the next nine million dollars.

So for instance, if the amount probated is $100,000, the executor and the attorney can each be awarded $4,000 for their fees. If the amount probated is $200,000, the executor and the attorney can each be awarded $7,000 for their fees. The following chart reflects the statutory fees for the attorney and the executor for an estate with a value up to $5,000,000.

PROBATE ESTATE VALUES

TOTAL ATTORNEY AND EXECUTOR FEES*

$100,000

$8,000

200,000

14,000

300,000

18,000

400,000

22,000

500,000

26,000

600,000

30,000

700,000

34,000

800,000

38,000

900,000

42,000

1,000,000

46,000

2,000,000

66,000

3,000,000

86,000

4,000,000

106,000

5,000,000

126,000

Please feel free to contact our office should you need help with a probate. This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help the older client and their families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

The Veteran’s Administration has a pension benefit known as Aid and Attendance, for the benefit of older, disabled war time veterans who have served at least one day in the service during an official wartime period. This benefit can help pay the costs of in home care, board and care and assisted living facilities. The benefit is also available to the surviving spouse of a wartime veteran.

These veterans are disabled due to “non-service connected reasons, which are usually age related. Their disabilities can result from diseases such Alzheimer’s, Parkinson’s, multiple sclerosis, and from other physical disabilities. Another possible criteria for eligibility is that the veteran needs the attendance of another person in order to avoid the daily hazards of his environment. It must also be shown that the veteran is in need of assistance with various activities of daily living, such as bathing, dressing, eating, etc.

Eligibility for this benefit is also determined by income, and the amount of assets the veteran has. A large portion of the cost of care being paid for in home care or the assisted living facility, can usually be applied against the veteran’s income in the VA application, to make eligibility easier.

A single veteran can receive up to $1,749 per month, which is $20, 988 per year. A married veteran can receive up to $2,127 per month, which is $25,524 per year. In addition, the surviving spouse can receive up to $1,153 per month, which is $13,836 per year.

If you are a veteran, or if you have a family member or friend who is a veteran receiving care, you should seek the guidance of an experienced elder law attorney who is familiar with this benefit. The attorney can help you determine whether eligibility is possible, and what steps can be taken to obtain eligibility.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help the older client and their families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

We are often asked the question as to how much you or your spouse can have in IRA’s and 401k’s and still qualify for Medi-Cal. The Medi-Cal applicant, or the ill spouse, can have any amount of IRA’s, 401k’s etc. These are so-called “qualified funds.” The only requirement is that the Medi-Cal applicant must be receiving periodic payments of some amount of principal and interest from these funds. Once this established, these qualified funds are considered exempt by Medi-Cal for qualification.

If the applicant is married, the well spouse can have any amount of IRA’s, 401k’s, etc., and there are no qualifications for distributions. So the qualified funds of the well spouse are totally exempt.

In addition, after the Medi-Cal applicant dies, the “qualified funds” of both spouses, are also exempt from recoupment by the state. As a result, the state will not go after your IRAs and 401k’s when you die.

In one of our recent cases, the ill spouse had approximately $100,000 in IRAs. The well spouse had approximately $300,000 in IRAs. The ill spouse was accepted for Medi-Cal.

There is a “share of cost” which is an amount the ill spouse must pay to the nursing home from the applicant’s income. We will review those rules in other blogs.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help the older client and their families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

You should have a Financial Durable Power of Attorney (DPA) as part of your asset protection estate plan. This DPA allows your attorney in fact, such as your spouse or a child, to handle various financial matters and transactions for you. Categories of these powers include real estate, banking, financial institutions, retirement plans, trust activities, etc. The DPA should also include powers for your care if you become ill. In addition, the DPA can include powers for asset protection and Medi-Cal planning.

The Financial DPA is good during your lifetime only. It is not effective after you die. The term “Durable” means that the powers survive your incapacity. If you become incapacitated, the powers in the DPA continue to be effective.

Springing vs. Immediate Powers:

“SPRINGING”: The powers in the Financial DPA can become effective only upon your incapacity. This means that if you become incapacitated and cannot handle your own financial affairs, a “doctor’s note” will be required to activate the powers in the DPA. The powers will then “spring” into effect.

“IMMEDIATE”: The powers in the Financial DPA can become effective immediately upon your execution of the document. In this case, you will eliminate the requirement of a doctor’s note, confirming that you are incapacitated. The immediate DPA is useful between spouses, who want the convenience of being able to immediately help each other with their financial affairs. It is also very helpful between elderly parents and children who are actively involved with their parents’ care.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help the older client and their families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Do not listen to your neighbors regarding Medi-Cal eligibility! Over the last number of days, we have been told by several individuals who are interested in our services, that their understanding is that they would never qualify for Medi-Cal based upon “advice” they received from their neighbors. In each case, the advice was wrong.

One person told me that she was told that her husband would not qualify for Medi-Cal because his IRAs were too high. I told her that her husband can have any amount of IRAs and still qualify for Medi-Cal. In fact, I told her that she, as the well spouse, can also have any amount of IRAs, and her husband could still qualify for Medi-Cal. In addition, I told her that both her and her husband’s IRAs cannot be collected against by the State for Medi-Cal recoupment.

In another case, an individual told me that she was informed that she could not qualify for Medi-Cal because she owned her own home. This information is also incorrect. All she has to do is express a subjective intent in writing that she intends to return home, even if she is in a nursing home. We prepare that documentation for our clients as part of their estate plan. This intent to return home is also confirmed on the Medi-Cal application. In addition, I told her that as of January 1, 2017, her home cannot be collected against by the State for Medi-Cal recoupment, if her home is in her revocable living trust at the time of her death.

In another case, a person told me that he understood that he could not qualify for Medi-Cal because his and his wife’s income was too high. This advice is also erroneous because of the Medi-Cal rules regarding Share of Cost. The state pays qualified nursing homes $8,189 a month for a Medi-Cal recipient, minus a share of cost from the recipient. The $8,189 is usually much lower than a nursing home would be if you were to private pay. The recipient’s income goes to a share of cost to the nursing home, up to $8,189, minus a few small deductions from the recipient’s income. If the recipient is married, the well spouse can keep all of her income, without penalty. If the well spouse makes under $2,981 per month, the ill spouse’s income is allocated to the well spouse’s income to bring her up to $2,981 per month. As a result, many of our clients end up paying a very small share of cost, and sometimes nothing, to the nursing home.

The moral of the story is, do not listen to your neighbors regarding Medi-Cal eligibility.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help the older client and their families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Forbes Magazine has recently reported that John Hancock is the latest insurance company to drop out of the traditional long term care insurance market. John Hancock has been one of the largest providers over the years, having sold some 1.2 million traditional long term care insurance policies. It is estimated that there are now less than 20 companies that are selling these traditional “use it or lose it” style of policies. Forbes says that, “This withdrawal signals what many financial planners, government officials, and financial service firms have known for years—that the United States is nearing a long-term care planning crisis.”

The reason that so many insurance companies have dropped out of the traditional long term care insurance market is because they are losing money on this type of policy. The insurance companies set initial premiums too low and they underestimated how long people would live. They also underestimated the cost of long term care and how much the cost of that care would increase over time.

Fortunately however, there are new insurance options that you can explore to help pay for your long term care. In 2010, an amendment to the Pension Protection Act (PPA) of 2006 was passed which can be very advantageous to Americans struggling to find ways to pay for long term care. As an example, many seniors own annuity contracts. Individuals who own annuities can now exchange those annuities, on a tax free basis, for Pension Protection Act style annuities that have long term care riders. The long term care rider in the new annuity contract can create multiples of the amount in the annuity that can be used for your care. For instance, $100,000 moving from your existing annuity into a Pension Protection Act style of annuity could create $300,000 in a rider to be used for your care. If you need help with two out of the six activities of daily living, you can “go on claim,” and the amounts distributed to you from the annuity for your care are distributed tax free.

You can also transfer money from any source into a Pension Protection Act style annuity or life insurance policy that has a long term care rider. The healthier you are, the easier it is for you to qualify for these new financial instruments. However, they are easier to qualify for than traditional long term care insurance policies because you are using your own assets to fund the long term care annuity or life insurance policy.

While you are updating your estate planning documents for long term care planning and asset protection with us, and if you are interested, we can help you explore these Pension Protection Act asset protection possibilities with you.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help the older client and their families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.